Cashflow is confidence
– the more you have the better. Try these ideas to control your cashflow
Set your terms of trade at the outset of each job and have your
customers sign off on them. Terms should include when you expect to
be paid and your ability to add interest and debt collection costs onto
any outstanding amounts.
Stick to your payment terms. Don’t let your customers pay you
Use a contracted debt collector on slow payers.
Set aside a percentage of all cash you receive into a separate bank
account to cover your tax payments. Ask us what that percentage
needs to be for your business.
Manage your work in progress by billing regularly, reducing the
number of jobs you have on at one time and setting budgets for your team
to stick to.
Only hold enough stock to cover the time it takes between the sale
of an item and when you can get delivery of the same item.
Measure how long in days on average it is taking to sell each stock
item and reduce obsolete stock. You’re better off to convert that
slow moving or obsolete stock back into cash and reinvest it in faster
Finance the cost of fixed asset purchases using over terms similar
to how long the asset will last before it needs replacing.
Set a budget for income and expenses each year and stick to
it. If a new cost is not in your budget then find a saving somewhere
Build a ‘war chest’ of cash in your bank account to cover at least
one month of expenses (ideally more).
Which ideas can you apply in your business? Talk to us about what else you can do. email@example.com
You must gain control over your money or the lack of it will forever control you – Dave Ramsey